Recommendation 5

HM Government Acknowledged

With regards to your recommendations on support for limited company directors, the principles underlying the Government’s approach to CJRS and the SEISS are to target support to those who need it most and protect taxpayers’ money against error and fraud, whilst reaching as many people as possible. Importantly, these schemes are based around matching claims submitted to data already on HMRC’s systems. 3.3 million people report dividend income on their self-assessment tax returns, and we cannot accurately or fairly identify who within that population should receive support. This 3.3 million covers a diverse population including working Directors but also inactive Directors (such as the spouses or children of working Directors who are jointly listed as Directors of companies) and general investors. Given some external estimates suggest an active Director population of 710,000, providing financial support to the entire 3.3 million self-assessment population with dividend income could result in more than 3 out of 4 grants going to people for whom income support is not intended. We also do not have data to verify what parts of a Director’s income to support, as dividend income could be coming from multiple sources including investments, and not just dividends in lieu of salary. Relying on self-certification to identify Directors or determine income sources could open any scheme up to unacceptable levels of fraud and error. This means there is no practical way to identify directors who have been unable to access the SEISS or CJRS, or identify the value of support they should receive, without exposing the taxpayer to significant fraud, legal risk and poorly targeted use of public money. Similarly, the same concerns remain in relation to the Directors Income Support Scheme (DISS) proposal, which Ministers and officials in HMT and HMRC have considered at length. The DISS proposal is not workable in its current form because unlike the SEISS which is based on data from the Self-Assessment system, HMRC does not hold the necessary information that would be required to implement the DISS. The DISS would need information on who is a working Director of a company, their remuneration amount from that company, and whether they are a director of one company or several. HMRC does not hold this information. The Government has considered using alternative datasets such as those provided by Companies House. Even with these sources of information, it is not possible to identify accurately an eligible population of companies or adequately target support to those directors in need. Any such scheme would require additional self-certification, potentially requiring significant manual operation and carrying with it a significant error and fraud risk. Directors who are ineligible for the SEISS and CJRS may still be eligible for other elements of the support available, including Restart Grants, the Recovery Loan scheme, business rates relief, and other business support schemes.